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Tuesday, August 18, 2009

Punitive approach to economic crimes only makes problems worse

Readers may be interested in this press release (pdf) from DPS describing new traffic laws that take effect on September 1.

The release mentions an important bill that I'd somehow completely missed during the legislative session - HB 2012 by Vaught - which is likely to negatively impact counties' jail and indigent defense costs. The new law makes it "a Class B misdemeanor if a person drives with a suspended license and without insurance," but combined with Texas' so-called "Driver Responsibility" surcharge the new law will result in many more petty offenders entering county jails on a day to day basis.

There's a negative, symbiotic relationship between no-insurance and no-DL offenses, which are essentially economic crimes. A driver who can't afford insurance and receives a ticket is assessed a criminal fine and a steep civil surcharge. Failure to pay the surcharge results in suspension of a drivers license, and of course an insurance company then won't sell an unlicensed driver insurance. That's all well and good for drivers with sufficient means to pay their way out of this tangle. But for those who are uninsured because of they don't have the money, current laws create an aggressively slippery slope that's exacerbated by HB 2012.

We're talking about a lot of folks. About one in four Texas drivers have no insurance and 2.7 million Texans have had their driver license suspended because of the "Driver Responsibility" fee. But since there's little public transportation in Texas and most adults must drive to work, hundreds of thousands of Texans find themselves in violation of these statutes at any given time and must choose whether to violate the law or earn a living.

Inevitably many will choose to violate the law, having little practical choice. But with the passage of HB 2012, police officers will now be obligated to arrest such drivers and take them to jail, even in counties where jails are dangerously full. What's more, by making the offense a Class B misdemeanor, legislators have required counties to pay for indigent defendants' attorneys. The "fiscal note" on the bill says "No significant fiscal implication to units of local government," but honestly that's just a flat-out lie.

Meanwhile, more fines and surcharges will rack up for drivers, making it even less likely they will be able to purchase insurance, pay off their surcharges, reinstate their licenses, or take other steps to make themselves street legal. How much sense does that make?

29 comments:

Anonymous
said...

If these people were really responsible they would do public transportation or carpool. Or get a job within walking distance. Or, if you are a two income family, let one parent stay at home. There are usually tons of options. So many of these uninsured are living in big cities which have public transportation anyway.

I don't know if the government can fix this problem with punishment, but don't call it an ecconomic problem. Its only ecconomic because so many irresponsible people also happen to be poor.

Uh, you don't live in Texas, do you? That's just false on its face. Also, most two income families don't have trouble paying tickets and insurance costs. "Crimes" where the only offense is failure to pay fees and fines are by definition "economic" crimes. When one in four Texans has no insurance, that's a structural economic problem, not purely a function of criminal intent.

@4:08, it would take an act of the Lege. Right now there are only a handful of B misdemeanors for which officers can issue citations (see here) and they failed to add this new one to the list.

Public transportation in pathetic. I ride it regularly because there a route that goes directly by where I work. In cities where there is a good transportation system you can get nearly anywhere in 20-30 minutes. In San Antonio it would take 2 hours and several transfers with long waits between buses. People without cars who live near the city center can make it downtown and back but anywhere else -- is very difficult.

With all respect, 10:33, I'll bet you've never taken a 2 hour bus trek to work 5 days a week and for every small errand, and wouldn't. It's a function of urban planning - Texas cities simply aren't designed for people without a vehicle to get around. 9:57 is exactly right.

Plus many people in trouble with the justice system aren't "really dedicated." Some have messy lives that make it folly to establish unrealistic expectations.

Bottom line ONE in FOUR drivers don't have insurance!!!! That's between 3 and 4 million Texas drivers. Are you saying it's realistic to expect all of them to ride public transport EVERYWHERE in its current, pathetic state? That's pure silliness, or else mean-spiritedness, I can't say which. It's fine to say it, just as I can say "The sky is green and the grass is blue." But both statements have about the same chance of ever becoming true in the real world.

Your comment on arresting everyone found to be driving without a license, and the unnecessary burden that that would impose on country jails, is well taken.

I'm a bit curious about your overall position on mandatory car insurance, given your comments about economic crimes. Insurance is a mechanism of spreading the unexpected costs of accidents around to a larger group of people so that no one person faces overwhelming financial tragedy; mandating car insurance is both a mildly paternalistic means of making drivers protect themselves, and more importantly, would guarantee that non-drivers who should happen to be injured in person or in property could recover damages for their harm. It's not a bad goal.

That being said, I understand that any law which criminalizes a fourth of your population isn't going to work, much like King Canute ordering the tide to halt. So what's the alternative? Those that I see are (1) abandoning the goal of insuring all drivers; (2) assessing penalty fees on the basis of a person's income (possibly unconstitutional); (3) some sort of public subsidy on the price of insurance to those with low income; (4) regulating car insurance providers in the same way that public utilities have sometimes been regulated -- impose a per capita cap on profits, which would have the dual effect of possibly lowering the cost of premiums and encouraging their spread, since insurance providers could only raise their total profits by expanding their market share*; (5) improving public transit so that it can become a viable alternative (probably prohibitively expensive, particularly compared to public subsidy of insurance).

* a per capita cap on profits should not be confused with an overall cap on profits, which would force providers out of the market, diminishing supply and therefore pushing up the cost of premiums.

I purposefully excluded the idea of ceasing to use revocation of a person's driver's license as a punishment, because it seems like the best punishment for the truly recalcitrant, as opposed to those violating the law under what is effectively duress.

Public transportation in Texas is atrocious. The bus system in Fort Worth is a joke. And Arlington, a huge sprawl of a suburban mess, has absolutely NO, as in ZERO public transportation. So Anonymous whatever, with your simpleton solutions, go stick your head back in the sand.

Brian, my personal preference, oft-stated on Grits, would be using the gas tax to implement a "pay at the pump" scheme for provision of no-fault, limited liability insurance. That would eliminate the auto-insurance problem entirely with no need at all for criminal enforcement.

That sounds reasonable, but I'd be concerned about funding any program through a sales tax on something like gasoline for two reasons. One, I'm not an economist, but my understanding is that a sales tax on something with relative inelasticity of demand will almost certainly be a regressive tax. Two, I'm not a politician nor exceedingly familiar with Texas politics, but it seems like funding a program through a sales tax on gas would limit its potential lifespan. As soon as there is another spike in the worldwide price of oil, politicians from across the spectrum would have a strong incentive to howl for the tax's repeal, and just about everyone feeling the pinch would be inclined to concur. Just a thought.

Brian, a gas tax is no more "regressive" (less so, actually) than a universal requirement to buy private insurance coupled with fines and punishments for noncompliance. All that costs money, too. Mandatory purchase of insurance is inherently regressive, but if that's the policy I'd prefer to use the tax code instead of the justice system to enforce it. Under pay at the pump, EVERYONE who drives is insured by definition if they have gas in their car.

As for pressure to reduce the tax when gas prices are high, if we went that route, it couldn't be something the Lege increased one year and reduced the next - there'd have to be an independent mechanism for rate setting. Costs would need to be adjusted over time, probably annually, just like other insurance premiums based on actuarial (not political) calculations.

Bottom line, though, it'd be cheaper for everybody. You'd get 100% compliance, the 75% currently paying would see their rates decline (because the "free riders" would be forced into the pool) and the state wouldn't spend tens of millions trying to enforce an unenforceable law.

I don't disagree with any of that (the gas tax's advantages over mandatory purchase). I was just leaning more in the direction of the third option of funding it from the overall state budget to avoid regressivity. Though, looking back at my post, I see that I failed to mention it, which would have been wise in light of my original comment.

The pay at the pump is a bad idea and its a nonstarter in Texas. Even if the punitive approach won't work, a much better idea would be no fault auto insurance. We don't need another government bureaucracy.

Personally, I think we should give the punitive approach more time. I can tell you my wife used to drive without insurance, and she did it because she knew that the probability of going to jail was really small.

We may have to put a lot more of these people behind bars before they get the message. And as more people start becoming scared to drive without insurance, they will take the bus more, and there will be an increase in demand for public transportation, which leads to an increase in quantity supplied.

Ah, gotcha. My sense is that voters wouldn't accept it unless they perceived drivers were responsible for their own insurance costs. People don't like to feel as though they're paying for freeloaders. Frankly I probably wouldn't support doing it through GR - IMO there needs to be some relation between cost paid and services rendered.

11:22 writes, "Personally, I think we should give the punitive approach more time"

It's been in effect for many years and a quarter of drivers are uninsured, how much more time do you need to evaluate it?

Putting people like your wife "behind bars" for economic crimes isn't an option when jails are full and county budgets can't afford new construction. (And how does she feel about you advocating her incarceration?) It's not practically possible to jail one in four drivers, even if you like the rhetorical sound of the idea.

Grits, there are innovations such as towing people's cars that are puting more teeth in the law. Does the state have authority to garnish wages for this penalty? Could they get it? You would know more about it than me.

But the most important approach to this crime will be jail. We don't have to put 25% of Texas drivers in jail. We can put a small number in jail and it will change human behavior.

It's amazing how people just cannot think about more than one aspect of a public policy problem. Using incarceration to "send a message" to the uninsured is ridiculous on its face. Do you honestly believe that a substantial portion of those without automobile insurance actually have some spare dollars laying around in a savings account, CD or bonds that could readily be used to buy auto insurance? Really? No, of course not. Most are living at a substandard level from check to check. They are driving without insurance because they cannot afford it. How is a perceived increase in the probability of being jailed going to change that? Hell, by driving naked, they are gambling now as it is; they will by necessity continue to gamble, but with higher stakes. Moreover, locking up such persons would have a dramatic detrimental effect on the public budget. Though few have apparently considered the scenario, getting locked up for no auto insurance causes a chain reaction: loss of auto; loss of job; necessity of public assistance in the form of food, medical care for the family, rent assistance--subsidized housing, etc. . .Stop and consider that approximately one out of four drivers don't have insurance. . .These aren't just a few outlaws or scofflaws, we are talking about millions of folks here. Jail should be used only for people we are afraid of, not those we are only mad at or, God forbid, we want to "send a message to."

The Dallas system of towing for uninsured motorists is the future. We can argue about this new bill and about a pay at the pump system, but I predict in 20 years every jurisdiction will be using it less than 10% of drivers will be uninsured.

Consider:1. It does not involve incarceration or jail, so no concerns about jail conditions, prison rape etc.

2. For people who pay to get their car back, the state recoups its costs and they are forced to buy insurance. So basically, the state loses no money and someone goes straight, at least for a while.

3. People who don't pick up their cars will have their cars auctioned off after about a month. So the state will recoup most its money at the end of the month for these offenders.

4. As a bonus, people who don't pick up their cars will probably not be driving for a while.

5. The potential for general deterrence is great since it involves immediate sanction. With a citation the offender will often not be thrown in jail until years later.

It will take time for local cities to expand their pounds and increase their traffic patrols but it will happen.

Your towing model certainly sounds cheaper for the state than the jailing model, and less harsh on uninsured drivers given that they would avoid unnecessary time in jail.

However, in terms of deterrence, I think you're overlooking the segment of people who cannot afford insurance, and yet must drive in order to get to their jobs. I don't have anything in front of me saying how many people fall into that category, but I'd wager that the 2.7 million people who lost their licenses for failure to pay the "Driver Responsibility" fee fell into it, along with however many people have not been caught.

When push comes to shove, if people need to break the law to survive, they're probably going to break the law and take their chances. In other words, they cannot be deterred.

The towing model could be adapted so that repeat offenders would not be eligible to retrieve their cars, which might physically prevent them from driving without insurance for a while. That, however, seems rather unjust if you're assuming that a large segment of these folks had little alternative (aside from facing the possibility of unemployment and its consequences -- family going hungry, no money for medical care, homelessness, etc). It's not as if these are hardened criminals.

people who cannot afford insurance, and yet must drive in order to get to their jobs

Brian, I'm aware that not everyone can be deterred. That's why we tow their car, and if they don't come and pay the fine, at least we have their car and it will be a while before they get another car and break the law again. In the meantime we can auction the car and recoup much of the expense.

You seem to believe it's the government's problem to make sure these people have a way of making a living. That's a philosophical difference between us.

"You seem to believe it's the government's problem to make sure these people have a way of making a living. That's a philosophical difference between us."

That's not exactly what I believe, but I appreciate your willingness to agree-to-disagree.

Though, I'd like to point out that what we're discussing is not a question of whether money should flow from the state to the citizen. Really it's the other way around. By requiring drivers to buy insurance, you're basically taxing them for the benefit of others (to guarantee that anyone harmed in a car accident will be reimbursed for their harm). Moreover, this burden is being imposed on people regardless of their driving records, which distinguishes it from institutions like tort liability or criminal law, in which the a person is free from legal interference until he or she actually causes harm.

Given that it's just another form of tax, I don't see why it can't be attenuated so that it doesn't result in state-induced impoverishment. That's done with income taxes, right?

Even if it were a simple question of whether money should flow from state to citizen for a particular purpose, I think it's wise to keep sight of the fact that a small investment of money today can save a community from the cost tomorrow of the externalities that would result from an increased incidence of impoverishment.

You used the word tax in a way that's alien to most Americans. A tax is based on income, property or purchase. Purchasing car insurance is a condition of service to use our public roads as a driver. Just as some life insurance policies make it a condition of service to not go sky diving, it is a condition of service to have auto insurance if you want to drive on the roads in Texas.

Maybe you think the "road enterprise" is different from a life insurance enterprise because our road enterprise is owned by the government. Incidentally, I view the Dallas policy of towing the uninsured as the best policy on the table. In the very long run I would love to see the privatization of roads. Its an involved topic, but you can read about it by buying Walter Block's book.

You mention that the the burden of driver's insurance is imposed regardless of a driving record, but this is not true. If individual A has a superior driving record to individual B, all things being equal, he will pay less for car insurance.

What we have is a very neat system where the market estimates who is a danger to the roads and charges different rates for insurance in proportion to that danger. We know this estimation will be accurate because it is driven by the profit motive.

You then go on to make the sweeping statement:

externalities that would result from an increased incidence of impoverishment.

So it sounds like your advocating social programs to somehow change society in a way that makes citizens less likely to commit crimes. I often see criminologists and sociologists advocating this. However, comprehensive costs-benefits analysis is almost exclusively the domain of economists. As economists generally take a dim view of this type of social engineering, I don't really take it seriously.

I have insurance, but I didn't always. I live in Dallas, and I loathe the towing mandate, and I absolutely despise the saying "It's a privilege to drive in Texas". This may be true, but it definitely touts a holier-than-thou attitude - that it to say, if you don't have money to buy insurance, then you don't drive. OK, we get it. Or we get jailed.

The social reprecussions of the towing laws, responsibility programs, etc, are undeniable. If one can't afford insurance, what makes you think that they can pay 250 bucks to get their car out?

It sounds like everyone is worried about "social programs" and "government intervention" - this is the same thing, in a worse way! Do something passive-aggressive for a change, instead of trying to get a quarter of the population angry, is the way I see it. The reason government programs end up so bad is because politicians are running off with the money, writing off ridiculous expenditures, and taking bribe money from insurance companies who make false statistics about how much damage the uninsured are costing us, then passing laws to make us buy the insurance!

As for privatizing all roads - I say hell no. I don't want another company charging me 5 dollars just to go from Irving to Grand Prairie. I need that for gas!

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